Around 11 million people are now able to tune into community radio stations across the UK. This figure is up 17% year-on-year and an increase of more than a third (36%) since 2008, according to a new report by Ofcom.

The Community Radio Annual Report provides a snapshot of community radio in the UK, which reveals a flourishing sector. Since the first station went live five years ago, a new community radio station has launched, on average, every 10 days. Today, a record 181 community stations are broadcasting and another 30 are preparing to take to the airwaves.

Community radio stations typically cover a small geographical area with a coverage radius of up to 5km and are run on a not-for-profit basis. They serve a wide range of communities, targeting diverse audiences from rural to inner city areas with content ranging from community news and information to religious issues to experimental music and RnB, for example.

Ofcom Chief Executive, Ed Richards, said: "The Community Radio Annual Report provides an encouraging picture of the state of community radio in the UK. In general, it's been a challenging few years for the radio sector. Community radio has shared these challenges. Despite this, it continues to deliver local content and other community benefits. It is a genuine success story, and a great credit to the thousands of volunteers and enthusiasts that make it happen."

2 million hours of volunteering

All stations involve volunteers in various jobs, including as presenters. The average station reports the involvement of around 75 volunteers over a year. Across the industry more than 40,000 volunteer hours are spent each week producing more than 15,000 hours of original radio output. Ofcom estimates that, with over 180 stations on air, volunteers currently contribute more than 2 million hours per year to community radio.

Chris Jones from Harborough FM in Market Harborough said: "One of the most satisfying achievements is watching people who initially came to us with little or no broadcasting experience being transformed into very competent community radio broadcasters."

Diverse audiences

A large number of community radio stations provide services for minority groups.

For example, Diverse FM in Luton broadcasts in community languages such as Bengali, Hindi, Gujarati, Urdu, Pahari, Polish, Arabic, Swahili and Patwa.

Ashuk Ahmed at Diverse FM said: "Communities are offered radio slots to broadcast dedicated programmes, enabling them to 'have a voice' by raising issues that are relevant to them and promote better understanding of each other's culture, religion and issues … this has brought about better community cohesion, enabling celebration of cultural diversity and understanding."

Several stations also provide services for rural communities, such as Tempo FM in Wetherby (West Yorkshire). "The station provides a much appreciated "Voice for Wetherby" to the considerable benefit of the community, on a very limited budget," said Stuart Robinson from Tempo FM. "Creating a new focus for the area through the medium of radio, by linking the various communities within the associated towns has been a great achievement."

Social gain

In addition to providing unique content, community radio stations deliver wide benefits to people in the areas in which they broadcast. This includes offering training and work experience opportunities, contributions to local education and providing a voice to those, such as older people or speakers of minority languages, who may find it harder to access the media.

Rob Green from Halton Community Radio in Runcorn (Cheshire) said: "Our station reaches parts of the community that other stations and community groups cannot reach; for example the house-bound and severely disabled. Without the station they would not be able to participate in local discussions and debate. This was the main aim of the station and we are proud that we have managed to achieve this."

shmuFM in Aberdeen has worked with a range of partners to create a full-time training programme for prison inmates including the production of programmes for broadcast on the community radio station. Murray Dawson from shmuFM said: "The scheme has provided encouragement, motivation and support to prisoners who continue to develop their skills, post release, which has contributed towards a break in their cycle of re-offending."

1.1 Community radio stations are not-for-profit radio services designed to operate on a small scale and to deliver community benefits, known as 'social gain', to one or more communities. The legislation enabling community radio services to be licensed was introduced in 2004 and amended in January 2010. The first community radio station launched in November 2005. This is Ofcom's third annual report on the community radio sector.

1.2 Ofcom has to date licensed 228 stations over two rounds of licensing. 181 of these are broadcasting and a further 17 have either decided not to launch or have handed their licence back, largely to due to funding problems. The remainder are preparing to start broadcasting. The second round of licensing has now concluded and Ofcom is currently considering whether there will be a third round of community radio licensing.

1.3 Community radio serves a diverse range of communities. The majority of stations licensed serve a general audience in either an urban/suburban area (17%) or a town/rural area (43%). Many services, however, serve smaller communities of interest. This includes, for example, those aimed at minority ethnic groups (14%), a youth audience (11%) and religious groups (7%). Of the licences awarded, 184 are in England, 14 in Northern Ireland, 20 in Scotland and 10 in Wales.

1.4 The legislation governing community radio sets out the characteristics of community radio services and defines social gain. Each station has a set of 'key commitments', which forms part of its licence and sets out how it will meet these characteristics and deliver social gain. It includes how a station will make itself accountable to its target community and ensure access, its programming aims and its commitments in respect of training and other social gain objectives.

1.5 The legislation also requires that Ofcom sets licence conditions limiting the amount of income that individual stations can generate from on-air advertising and sponsorship. For the majority of stations this limit is 50%, however, two stations have lower limits (25% and 10%) and a further 17 stations cannot take income from on-air advertising and sponsorship at all. These additional restrictions have been put in place to protect existing smaller commercial services whose coverage areas overlap with the community services.

1.6 Each station that has been broadcasting for more than a year is required to complete an annual report. The reports detail how each station has performed against its key commitments and identifies its sources of income and expenditure. The financial aspect of the reporting enables Ofcom to check whether the station has stayed within the legislative restrictions on funding.

1.7 For the period April 2009 to March 2010 Ofcom received key commitments annual reports from 128 stations and financial annual reports from 125 stations. Two stations were excused from providing financial reports and one station did not provide its financial report in time to be included in this report. One station did not submit either its key commitments or financial reports.

1.8 Annual reports were not required from stations that launched during this period or subsequently and are therefore not included in this report.

1.9 In 2009/10 the average (mean) station's income was around £74,500. The median figure, the mid-point in the distribution of station's income, was considerably lower at £44,500. This is because a small number of stations are earning significantly more than the majority.

1.10 The total reported income of the four highest earning stations, each reporting over £250,000 income for the reporting period and earning a total of just over £1.6m, equates roughly to the total income of the 66 lowest income stations. If we exclude the four highest earning stations' income then the average income drops to £62,000. The median figure remains relatively similar at £42,000.

1.11 Stations targeting a community of interest (rather than a geographic community) reported a higher income than the sector average. For example, services targeting minority ethnic communities had an average income of £80,000. Stations serving a general audience in an urban area reported a higher average income than town/rural stations (£83,000 as opposed to £56,500).

1.12 The average (mean) sector income is down by around 6% on the previous year's reported figures. In the 2008/09 period income had dropped by almost 20% compared to the period prior to this. The median income for this reporting period has dropped by 11% compared to the 2008/09 period.

1.13 When compared to previous years, the proportion of income from specified sources to any significant extent appears similar. The most significant type of income for the sector is grant funding which accounts for 35% of the total. Income from on-air advertising or sponsorship accounted for around 22% of total income across the sector. Thirty stations (24% of those from which we had financial returns) had no income from advertising and sponsorship. Of these, 19 stations chose not to take this type of income as a matter of choice or policy. The remaining 11 stations were prohibited under their licence from doing so.

1.14 Public sources of funding accounted for 37% of the total sector income. Local authorities accounted for around 8% of the sector's total income. 25% of income came from other public bodies such as the Arts Council, health providers, educational establishments and various national lottery award schemes.

1.15 The Community Radio Fund, which is administered by Ofcom on behalf of the Department for Culture, Media and Sport, accounted for £348,000 (around 4% of the sector's total reported income). The Community Radio Fund continues to be the largest single source of income for the sector although a small number of individual funders made grants or entered into service level agreements (SLAs) - negotiated agreements between two parties where one is the customer (e.g. the local council) and the other is the service provider (the station) - of more than £100,000 in the year under review.

1.16 Community radio stations, on average, are spending roughly the same as their income. Stations cost, on average, around £74,500 to run. This has declined by 8% compared to the previous reporting period. The median expenditure for this reporting period has remained stable compared to the 2008/09 period.

1.17 The highest cost for community radio stations remains staff expenditure, which accounted for almost 50% of stations' costs. Premises and technical costs, as in previous years, account for the next most significant outlay.

1.18 Individual circumstances range from a surplus of £83,000, to a deficit of £158,000. Almost 50% of stations that returned a financial annual report were in deficit. Of these 59 stations in deficit, 21% reported this to be in excess of £10,000. In most cases, large deficits are being funded by parent organisations; any surpluses are typically invested in the operation of the service.

1.19 Community radio stations broadcast live for around 80 hours per week on average, and, in general, broadcast a further 10 hours per week of original pre-recorded material. On average around 31% of daytime output is speech and this can feature a wide range of local organisations and community initiatives.

1.20 Some stations focus on particular genres of music, while those serving a geographic audience generally broadcast more mainstream music during daytime programming, often moving to specialist output in the evening.

1.21 The average station reports the involvement of around 75 volunteers although there is a wide variation - from 1 to over 300. Together these volunteers give on average of around 213 hours a week of their time in total.

1.22 At a cost of under £10 million pounds, based on the reports received from stations in this reporting period community radio in the UK delivered:

* A total of almost 10,000 volunteering opportunities* Over 25,000 volunteer hours each week* Over 10,000 hours of original radio output each week* Output broadcast in a wide range of community languages

1.23 There are now over 180 stations broadcasting and Ofcom estimates that volunteers contribute close to 170,000 hours a month or over two million hours per year to community radio.

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